Joseph Stiglitz, a leading economist and winner of the Nobel Prize for Economics in 2001, has said that the use of deep spending cuts was a disaster for Europe and that the continent was heading towards more economic difficulties if politicians cut spending rather than calm down financial markets.
He stated that he felt sorry for the people of Ireland in particular, who have to suffer from this policy.
He said historical evidence showed that increased state spending helped economies emerge from recession.
In Ireland the austerity measures lead to declining output, rising unemployment and high bond spreads, instead of renewed investment.
In the UK the Governor of the bank of England has admitted that “the crisis was caused not by problems in the real economy, it came out of the financial sector”.
No shit Sherlock, as they say down Baker Street way. He said this by way of telling unions to live with the cuts in spending or feel worse economic pain.
Divergent views on the strategy to get out of recession, but consensus on the causes. With the banking bonus season upon us once again, it will be interesting to see if any curbs or pain, or cuts are visited on the banking fraternity and financial sector.
